Microfinance Institutions - Factors in Risk Assessment

This report aims to highlight those elements of a MFI's risk profile that Fitch Ratings evaluates when assigning international and national credit ratings to MFIs, and how these may differ from those of a conventional bank.

MFI demand for credit ratings has increased in recent years, driven by their growing funding needs to support rapid expansion. Although the microfinance sector is populated by a large number of relatively small MFIs, some “top-tier” MFIs have emerged and become internationally active. These top-tier MFIs, the capital market investors interested in microfinance investments, and increased regulatory requirements in some countries, have driven an increase in demand for credit ratings.

[Author's abstract]